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How to Choose an Advisor

 

Choosing the right advisor is extremely important. Unless you are intimately familiar with the inner workings of the financial services industry, it will be difficult to know which questions to ask. Here are a few important issues to understand and questions to ask.

  • Are you a broker or Registered Investment Advisor?

    • Brokers have a lower legal standard of care (suitability standard) than an RIA (fiduciary standard).​​​​

  • Which legal standard are you subject to? A suitability standard or fiduciary standard?

    • A fiduciary standard is the highest standard in the industry.

  • Is your firm a large, publicly-trade company or an independent firm?

    • There are numerous, potential conflicts of interest with large, publicly-traded company's.​

  • Do you ever recommend proprietary products?

    • These products are usually more profitable for the company.​

  • How are you compensated? Commissions, fees, or both?

    • Commissions are an incentive for an advisor to buy & sell financial products.​

  • What credentials do you hold?

    • Designations, etc.​

  • How long have you been in the business?

    • It takes several years to transition from the academic world to the real world.

  • Have there ever been or are there currently any complaints against you?

    • Multiple complaints is a red flag.​

  • Are you subject to any production requirements?

    • These are imposed by management and are more common in large firms.​

  • How many clients do you serve?

    • There is a limit to the number of clients an advisor can effectively serve before service suffers.​

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